How to become a “David” in the e-commerce world?
The growing market share of e-commerce goliaths like Amazon or AliExpress is no news to anybody in the e-commerce business. With the ever-growing expansion to new markets, the number of concerned decision-makers is rising. I get questions like, “How can I compete with such giants?”, “What can I do to keep my business running once Prime comes?”, etc. pretty much every other week. There are two strategies I´ve noted to become more and more dominant in addressing this pressure from the big players. I´ll now elaborate a bit on both.
Strategy 1: YOU too can become a giant in the digital world
The first thing you can do is focus on gaining market share in your home territory/markets. The e-commerce giants are most known for their wide assortment of products sold online, which is seen as a big differentiator. This combined with fast shipping is usually emphasized as the competitive advantage hardest to compete with. What a lot of e-retailers don´t know is that with changes in processes, business model and a bit of help from technology, competing with size and speed is real.
There are four critical actions that help increase your online business revenue quite substantially. Firstly, you should consider changing your product management processes and consider product information management as a cornerstone for your digital sales. This enables faster product launch, easier and more automated management of product information across all channels and provides tools to automate product information gathering. PIM is an enabler for growing product assortment to 100 000 or even 1 000 000 (why not?!) without employing tens of additional employees to manage them. And more products mean more cross-sales and higher shopping basket value. If you have a well-designed online sales channel in place, the sales of these new products are easily handled as well.
Secondly, you need to focus on integrating your business software. Integrating your ERP, online sales channel, marketing tools, logistics system (provider) gives you the possibility to optimize purchasing, give more accurate delivery dates and give customers products they want when they want them with the highest possible margin.
Thirdly, it’s always important to be noted. Of course, your marketing budget does not compete with the ones Amazon, AliExpress or any other big player has. But considering the tools available today, like Google Ads, Facebook Ads, and Instagram, a lot can be achieved with a reasonable budget. Focus on really understanding your customers and directing messages that resonate best with them – start off with your home market, where your understanding of the culture and your consumers is your strategic advantage, and expand from there.
Fourthly, automate. As you might not have the possibility to hire hundreds of employees, you need to be smart and effective in your processes. With the development of technology, things like machine learning can help you a great deal. Using machine learning to automate your marketing or purchasing activities you can scale your business exponentially.
Strategy 2: Don´t try to beat them in their own game
As opposed to being like them, you can take the opposite direction. Personalization is the key here. Not being a large tanker, but rather a jet-boat, you can be more flexible and try out various approaches. For example, you could start providing part of your goods on a subscription-based model, creating customer commitment and tying the consumer with your brand. In addition, providing customers with related services could be another way of maintaining and gaining market share. For example, an electronics sales company could start providing home delivery and setup service for the goods they sell. Or a musical instruments store could partner up with private music school to compliment consumers with discounted music lessons. There are numerous ways you can go – just think outside the box.
I’ve seen a great example of such an approach is one clothing company. Instead of competing with cheap fashion brands that sell volume, they focused on producing high-quality clothing that would last 3-5 years, easily. Their promise to the market was, that with unique Nordic design and quality material, you will be more environmentally friendly and in the kids’ segment, would be able to use one piece of clothing longer than before. This meant they were able to attract the higher paying customer segment, which is usually more brand loyal and that has kept their business growing ever since.
And why not cooperate with the goliaths we are so afraid of? Really, why not? There is great potential in expanding your business with the help of these same platforms we feel intimidated by. For Amazon or AliExpress to complement your existing business, you just need a partner that can integrate your systems with theirs and from there you can use their marketplace as a springboard for expansion.
As I see it, there are different options for competing with the big e-commerce players on the market. The way you want to approach this depends on your business, strategy and willingness to experiment. There will of course be things that work for your business and things that don´t. The important thing is that you start with something – already today!
In case you have a different experience or strategy that has worked for your business, I would be glad to hear more about it. If you are already planning actions to implement your strategy, then our team is more than happy to make an effort for your success.
Head of eCommerce Domain at Net Group Ltd